12A & 80G Registration

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12A & 80G Registration

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What is 12A Registration?

Non-Profit Organizations play a critical role in India’s social and economic development. However, they do not have a stable source of income to generate surplus. They are mainly dependent on grants, donations, and other contributions.

12A and 80G Registrations are means by which the Government seeks to encourage such contributions to non-profit organizations such as Trust, Society, and Section 8. Let’s understand how!

12A Registration is an important registration under Section 12A of the Income Tax Act, 1961, which allows a trust, NGO, or charitable entity to get an income tax exemption in India. 12A certificate is important for NGOs that cannot levy tax on any profit earned by the organisation.12A provides tax exemption to NGOs on the income they earn from grants, donations, and other contributions.

Some Points of 12A

Purpose of 12A Registration

1. To exempt the income of Trusts, Section 8 Companies and Societies from tax
2. To promote charitable activities like education, relief, healthcare, etc.
3. It is mandatory for an NGO to want tax benefits

Benefits of 12A Certificate.

1. Income Tax exemption on surplus/profit income.
2. It helps to build credibility with donors and the markets.
3. 12A is required before applying for 80G registration (for donor tax benefits)
4. It enables better fundraising opportunities

Who Can Apply 12A Registration

1. Trusts.
2. Societies
3. Section 8 Companies (non-profit companies)

Basic Conditions

1. Income must be utilized only for charitable purposes.
2. Proper books of accounts must be maintained.
3. Cannot distribute profit to members.

What is 80G Registration?

The 80G deduction is a tax benefit available to entities such as trusts, societies, and Section 8 companies that donate to approved charitable organizations under Section 80G of the Income Tax Act, 1961.

It allows you to reduce your taxable income by claiming a deduction for donations made to eligible NGOs, trusts, or funds.

Some Points of 80G

Purpose of 80G Registration

1. Encourage charitable donations
2. To Provides tax relief to donors
3. Increase funding opportunities for NGOs

Benefits of 80G Certificate.

1.Donors get 50% or 100% tax deduction (depending on category).
2. Builds trust and credibility for the organization.
3. Helps NGOs attract more donations.
4. Essential for fundraising campaigns.

Types of Deduction under 80G

1. 100% deduction (without limit) – e.g., certain government funds.
2. 50% deduction (without limit).
3. 100% or 50% with qualifying limits (based on donor income).

Basic Conditions

1. Must be a registered charitable organization.
2. Should not use income for non-charitable purposes.
3. To Proper books of accounts required.

12A & 80G Registration documents:-

Section 8 Company/ Society/ Trust registration documents.
Directors or Trustee’s PAN Card.
Aadhar Card of the directors or trustees.
Trust Deed (in the case of a Trust) or Memorandum of Understanding (MOA), Articles of Association (AOA) of the Company (in the case of a Society/Section 8 Company).
Audit Reports of all years since incorporation of the Section 8 NGO/Trust/Society.
A comprehensive list of welfare activities.